The falling dollar, which makes commodities like oil more attractive, outweighed a new report from the International Energy Agency, which said energy demand is sliding sharply.

Crude prices have spiked ahead of next week's meeting of OPEC, which is expected to slash production.

"Probably the biggest factor right now is financials," said Phil Flynn, an analyst with Alaron Trading Corp. "The market is worried that all these bailouts ... means we're going to be printing a lot more money, which makes the dollar weaker. That's really supporting the price."

Analysts cautioned reading too much into oil's rally. The price is up nearly 18 percent from last Friday's settlement price. After all, you don't have to look far to be reminded of the global economic downturn and its effect on crude consumption.

Paris-based IEA said Thursday that global oil demand will shrink this year for the first time since 1983. The IEA cut its forecast for global oil demand in 2008 by 350,000 barrels a day to 85.8 million barrels a day, down 0.2 percent from 2007.

The IEA also cut its forecast for global oil demand in 2009, saying it would increase by just 0.5 percent next year, to 86.3 million barrels a day. That's 200,000 barrels a day less than its estimate last month.

"It's premature to say the lows have been placed," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "If they don't put an auto package together soon, if the stock market gets slammed 300 or 400 points, we could shrug off the currency factor pretty quickly."

Light, sweet crude for January delivery rose $4.46 to settle at $47.98 a barrel in trading on the New York Mercantile Exchange, after rising to near $49 earlier in the session.

Prices at the pump, however, continue to plummet. Gasoline prices fell 1.9 cents overnight to a national average of $1.664 per gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That's 55.6 cents a gallon below what it was a month ago and $1.326 below where it was a year ago.

The U.S. dollar lost ground against other major currencies, making commodities like oil more attractive to investors as a hedge against inflation and dollar weakness.

The euro rose to $1.3227 on Thursday from $1.2988 late Wednesday in New York, while the dollar fell to 91.18 Japanese yen from 92.63 yen in the previous session.

Focus has remained on comments coming from the Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global crude supply. The group has signaled it plans to slash output quotas at a meeting Dec. 17 in Algeria.

Many analysts expect production cuts of as much as 2 million barrels a day, which would match the combined reductions of two previous output cuts earlier this year.

Victor Shum, energy analyst at consultancy Purvin & Gertz in Singapore, said indications from Saudi Arabia - the biggest oil producer in OPEC - that it would cut production going into January boosted hopes of a significant output reduction.

Russia's plan to coordinate production levels with other non-OPEC producers also supported prices. Energy Minister Sergey Shmatko said Russia would soon make an announcement of its intentions with OPEC.

"I'd like to say that we are ready to defend our revenue base - oil, gas. Moreover, such defensive measures could be connected with a reduction in oil output, and with the participation in the existing organization of producers," he was quoted as saying by RIA-Novosti and Interfax.

Shum said OPEC production cuts, which had failed in the past to curb plummeting oil prices, would not result in a rally but would stabilize the market and prevent any further downward spiral.

"There is a lot of bad economic news and if there is no meaningful cut by OPEC, oil pricing will come under a lot of downward pressure," he said.

What's more, he added, the success of any output cut in stabilizing the oil price will depend on how closely OPEC members comply with it.

In two separate announcements, OPEC said it would cut production by 2 million barrels a day.

OPEC's November production was well above quotas agreed to by member states, according to Platts, the energy information arm of McGraw-Hill Cos.

OPEC's 13 members pumped an average of 31.38 million barrels a day last month, a decline of only 880,000 barrels from the October level.

Oil prices have fallen 70 percent since peaking at $147.27 in July. After hitting $40.50 a barrel last week, some oil traders believe that if the market has not bottomed out, it is close to doing so.

"While we maintain our bearish bias, we are of the opinion the market has found a range in between the low $40s on the bottom and the mid $50s on the high end," oil trader and analyst Stephen Schork said in a report Thursday.

In other Nymex trading, gasoline futures jumped nearly 11 cents to settle at $1.0786 a gallon. Heating oil gained 10 cents to settle at $1.5066 a gallon and natural gas for January delivery fell 11.8 cents to $5.568 per 1,000 cubic feet.

In London, January Brent crude soared $4.99 to settle at $47.35 on the ICE Futures exchange.

Online Public Information File

Viewers with disabilities can get assistance accessing this station's FCC Public Inspection File by contacting the station with the information listed below. Questions or concerns relating to the accessibility of the FCC's online public file system should be directed to the FCC at 888-225-5322, 888-835-5322 (TTY), or fccinfo@fcc.gov.